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City files suit against Danielson, NURD over sign

August 24, 2013
By Josh Moniz - Staff Writer , The Journal

NEW ULM - The City of New Ulm has filed a lawsuit against the two owning entities of the Marktplatz Mall and the dozen potential interests related to the property, over ownership of the electronic mall sign in the City Hall parking lot.

The sign was installed on May 23, 2001 in a joint agreement between the City of New Ulm, the New Ulm Area Chamber of Commerce and Retail Investment II, LLC., which owned the mall at the time and was run by Bob Petroff. The agreement allowed the sign to be built in the city parking lot and maintained by the mall's owner in exchange for the city and the Chamber each getting 10 percent of its advertising time to promote their own groups. The agreement covered 10 years and allowed an automatic continuation of the agreement as long as the determined mall owner notified the city at least 180 days prior to the end of the term.

The sign has been largely unused for four years and is in need of several repairs. Estimates on repairs to the sign have ranged from $50,000 to $60,000. Additionally, the city has had to cover the cost of the utilities being hooked up for several years.

Article Photos

Staff photo by Josh Moniz

The City of New Ulm has filed a lawsuit against the two owning entities of the Marktplatz Mall and the dozen potential interests related to the property, over ownership of the electronic mall sign in the City Hall parking lot.

The city's argument in its lawsuit is that no mall owner notified the City within the time frame, ending the agreement. The city is asking for a declaratory judgment that the agreement was not renewed and that the city alone has exclusives rights with the sign. The city plans to either remove the sign to regain the parking spot, fix the sign for its own use or sell the rights to use the sign to a local business.

In additional to the legal argument the city is presenting, the terms of the agreement state that the "mall owner" does not have a right to transfer the designation to another person or organization for the purposes of the agreement, even if the ownership of the mall itself is transferred. Instead, the new designation can only occur if the city and the Chamber of Commerce explicitly approve a change. If no official designation of a new owner was performed, then Petroff would still be considered the "mall owner" for the purposes of the agreement. Petroff has officially stated he has no interests in the sign and would allow the city to take over ownership.

The main factor that remains to be seen with the litigation will be whether any of parties the city is suing will file an objection.

New Ulm Retail and Development, LLC. (NURD) and its managing member Doug Cogan have expressed no interests in challenging the city. The organization owns the northern two-thirds of the mall. Cogan said he is not interested in expending funds to restore the sign since it has only been minimally beneficial to the mall.

Randy Danielson, the owner of the southern third of the mall, has previously stated he plans to challenge any effort by the city to claim the sign. He could not be reached for further comment on Friday. He also has an interest in the other side of the mall through his company SEK Financial, which owns the first mortgage on that side.

The final major party is Upper Midwest Management Corporation, which has been appointed to lead the receivership of the NURD side of the mall. The receivership is part of a larger ongoing legal battle between Danielson and NURD. Representatives of Upper Midwest have stated they do not plan to get involved in this litigation.

The remaining parties listed in the lawsuit relate to different organizations or individuals that have had an interest in the second and third mortgages on the NURD side of the mall. None have voiced any opinions yet in the different legal issues facing the mall, and are not expected to get involved with this lawsuit.

The previous City estimate for the cost of the litigation was $5,000. No date has been set yet for proceedings in the lawsuit. However, City officials anticipate the lawsuit will resolve in a few months.

Josh Moniz can be e-mailed at jmoniz@nujournal.com.

 
 

 

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